| Case ID |
4667ae70-4b53-4c67-b561-14e325bb0b08 |
| Body |
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| Case Number |
I.T.A. No.257/LB of 2011 |
| Decision Date |
May 09, 2011 |
| Hearing Date |
Apr 14, 2011 |
| Decision |
The Appellate Tribunal accepted the appeal of the taxpayer, ruling that the goods exported were textile made ups, specifically terry towels and bath robes, which should be taxed at a rate of 1% on export proceeds. The Tribunal found that the previous tax demand, which increased the tax rate to 1.5%, was not valid as the goods in question were categorized as textile made ups, therefore, the taxpayer's claim for a lower tax rate was justified. The Tribunal also noted the lack of jurisdiction in the earlier order and declared it void ab initio. |
| Summary |
In the case of I.T.A. No.257/LB of 2011, the Appellate Tribunal Inland Revenue made a critical ruling regarding the taxation of textile exports by Messrs Zephyr Textiles Ltd., Lahore. The Tribunal examined the application of the Income Tax Ordinance, specifically sections 154 and 221, alongside the Seventh Schedule. The core issue centered on whether the exported goods, categorized as terry towels and bath robes, should be taxed at a rate of 1% or the disputed 1.5%. The taxpayer contended that these goods fell under the definition of 'textile made ups,' which warranted the lower tax rate. The Tribunal found merit in this argument, highlighting that the goods were finished products ready for use and thus qualified for the 1% tax rate. The decision emphasized the importance of proper categorization of goods in tax law and underscored the necessity for tax authorities to adhere to established legal frameworks when determining tax liabilities. The ruling not only accepted the taxpayer's appeal but also clarified the jurisdictional limits of tax rectification orders under section 221, asserting that the initial increase in tax rate was legally unjustifiable. This case sets a precedent for similar disputes in the textile sector, promoting fair taxation practices and protecting the rights of exporters. Keywords: textile exports, income tax, tax rate, legal precedent, taxation dispute, textile made ups. |
| Court |
Appellate Tribunal Inland Revenue
|
| Entities Involved |
Messrs ZEPHYR TEXTILES LTD.,
C.I.R. (LEGAL) R.T.O
|
| Judges |
JAWAID MASOOD TAHIR BHATTI, JUDICIAL MEMBER,
MRS. TABANA SAJJAD NASEER, ACCOUNTANT MEMBER
|
| Lawyers |
Not available
|
| Petitioners |
Messrs ZEPHYR TEXTILES LTD., LAHORE
|
| Respondents |
C.I.R. (LEGAL) R.T.O
|
| Citations |
2011 SLD 1487 = 2011 PTD 2290
|
| Other Citations |
1999 PTD 4138 (H.C.),
2009 PTD 2163,
2009 PTD 253,
2007 PTD 967,
1992 PTD 570
|
| Laws Involved |
Income Tax Ordinance, 2001
|
| Sections |
154,
221,
Seventh Schedule, Part-II & III
|